Gold Surges 1.87% to $3,317.90 as Trade Tensions Fuel Safe-Haven Demand

Gold prices surged to an unprecedented high of $3,317.90 per ounce on April 16, 2025, marking the fifth positive trading day in the last six sessions. This surge was driven by escalating trade tensions between the US and China, as well as shifting tariff policies that have created significant market uncertainty.

The price increase of 1.87% in a single day extended gold’s year-to-date gains to nearly 26%. This rally has been fueled by several factors, including trade disputes, central bank purchases, anticipated interest rate cuts, and increased investment in gold-backed exchange-traded funds (ETFs).

President Donald Trump’s recent policy announcements have been a major driver of this market uncertainty. Last week, Trump paused reciprocal tariffs for 90 days, but this temporary measure still maintains 145% duties on many Chinese imports. Additionally, Trump ordered a probe into potential new tariffs on US critical minerals imports, a move widely seen as targeting China, the leading producer of critical minerals. Trump has also promised to unveil tariffs on imported semiconductors within the next week and threatened levies on pharmaceuticals in the future.

In response, China increased its tariffs on US imports to 125%, raising concerns about the potential impact on global economic growth. These tit-for-tat measures have pushed investors toward traditional safe-haven assets like gold. The US dollar has weakened considerably, touching its lowest level since April 2022, which typically benefits gold prices as it makes the metal cheaper for holders of other currencies.

Despite these concerns, China’s economy showed strength in the first quarter, growing 5.4% year-over-year and exceeding expectations. Chinese retail sales, industrial production, and fixed asset investment also came in better than estimated, though these positive indicators were overshadowed by rising trade tensions with the US.

Analysts have noted that Trump’s trade war shows no signs of easing, sparking a fresh move towards safe havens and out of stocks. A recent survey revealed that 73% of respondents believe that “US exceptionalism” has peaked, impacting markets. Furthermore, 49% now view “long gold” as the most crowded trade, overtaking bets on US tech giants for the first time in 24 months. ANZ has raised its year-end gold price forecast to $3,600 per ounce and its six-month forecast to $3,500, reflecting a bullish outlook for the precious metal.

Gold’s Relative Strength Index (RSI) on daily and 4-hour charts indicates the metal is in overbought territory, which might warrant caution for bullish traders. This technical indicator suggests that a period of consolidation or a modest pullback could occur before further price appreciation. However, analysts suggest that any decline would likely be seen as a buying opportunity, with strong support expected ahead of the $3,200 mark.

Investors are now looking forward to comments from Federal Reserve Chair Jerome Powell for more clues on the interest rate path. The Fed is expected to lower borrowing costs by 100 basis points in 2025, which would likely provide further support for gold prices. Other precious metals also saw gains, with spot silver rising 2% to $32.94 an ounce, platinum up 0.1% to $960.85, and palladium gaining 0.6% to $977.09.